IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-07q20001.html
   My bibliography  Save this article

Citizens' demand for permits and Kwerel''s incentive compatible mechanism for pollution control

Author

Listed:
  • Andrew Yates

    (University of Richmond)

  • Daniel English

    (University of Richmond)

Abstract

An interesting feature of pollution permit markets is that citizens may purchase permits to directly lower the levels of pollution. Kwerel's mechanism (Review of Economic Studies~1977) is not incentive compatible when citizens demand permits. We show that a modification of Kwerel''s mechainism, the minimum-price mechanism, is incentive compatible when citizens demand permits, even in the case where there is uncertainty about the damages from pollution.

Suggested Citation

  • Andrew Yates & Daniel English, 2007. "Citizens' demand for permits and Kwerel''s incentive compatible mechanism for pollution control," Economics Bulletin, AccessEcon, vol. 17(4), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-07q20001
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2007/Volume17/EB-07Q20001A.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Conley, John P. & Smith, Stefani C., 2005. "Coasian equilibrium," Journal of Mathematical Economics, Elsevier, vol. 41(6), pages 687-704, September.
    2. Ratna Shrestha, 1998. "Uncertainty and the Choice of Policy Instruments: A Note On Baumol and Oates Propositions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(4), pages 497-505, December.
    3. Partha Dasgupta & Peter Hammond & Eric Maskin, 1980. "On Imperfect Information and Optimal Pollution Control," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(5), pages 857-860.
    4. Smith, Stefani C. & Yates, Andrew J., 2003. "Optimal pollution permit endowments in markets with endogenous emissions," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 425-445, November.
    5. Malueg, David A. & Yates, Andrew J., 2006. "Citizen participation in pollution permit markets," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 205-217, March.
    6. Evan Kwerel, 1977. "To Tell the Truth: Imperfect Information and Optimal Pollution Control," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 595-601.
    7. Lewis, Tracy R. & Sappington, David E. M., 1995. "Using markets to allocate pollution permits and other scarce resource rights under limited information," Journal of Public Economics, Elsevier, vol. 57(3), pages 431-455, July.
    8. Boyd, John III & Conley, John P., 1997. "Fundamental Nonconvexities in Arrovian Markets and a Coasian Solution to the Problem of Externalities," Journal of Economic Theory, Elsevier, vol. 72(2), pages 388-407, February.
    9. Aparna Guha, 1996. "Internationalizing the Role of Domestic Pollution Permit Market," Eastern Economic Journal, Eastern Economic Association, vol. 22(4), pages 449-456, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Asproudis, Elias & Weyman-Jones, Tom, 2011. "Third parties �participation in tradable permits market. Do we need them?," MPRA Paper 28766, University Library of Munich, Germany.
    2. Nava Kahana & Yosef Mealem & Shmuel Nitzan, 2009. "The Efficient and Fair Approval of “Multiple‐Cost‐Single‐Benefit” Projects under Unilateral Information," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(6), pages 947-960, December.
    3. Peifang Yang & Daniel T. Kaffine, 2016. "Community-Based Tradable Permits for Localized Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 773-788, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:v:17:y:2007:i:4:p:1-9 is not listed on IDEAS
    2. Asproudis, Elias & Weyman-Jones, Tom, 2011. "Third parties �participation in tradable permits market. Do we need them?," MPRA Paper 28766, University Library of Munich, Germany.
    3. Peifang Yang & Daniel T. Kaffine, 2016. "Community-Based Tradable Permits for Localized Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 773-788, December.
    4. John Duggan & Joanne Roberts, 2002. "Implementing the Efficient Allocation of Pollution," American Economic Review, American Economic Association, vol. 92(4), pages 1070-1078, September.
    5. Rousse, Olivier, 2008. "Environmental and economic benefits resulting from citizens' participation in CO2 emissions trading: An efficient alternative solution to the voluntary compensation of CO2 emissions," Energy Policy, Elsevier, vol. 36(1), pages 388-397, January.
    6. Malueg, David A. & Yates, Andrew J., 2006. "Citizen participation in pollution permit markets," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 205-217, March.
    7. Kahana, Nava & Mealem, Yosef & Nitzan, Shmuel, 2008. "A complete implementation of the efficient allocation of pollution," Economics Letters, Elsevier, vol. 101(2), pages 142-144, November.
    8. Dafna Eshel & Richard Sexton, 2009. "Allowing communities to trade in imperfectly competitive pollution-permit markets," Journal of Regulatory Economics, Springer, vol. 36(1), pages 60-82, August.
    9. Shrestha, Ratna K., 2017. "Menus of price-quantity contracts for inducing the truth in environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 1-7.
    10. Unold, Wolfram & Requate, Till, 2001. "Pollution control by options trading," Economics Letters, Elsevier, vol. 73(3), pages 353-358, December.
    11. Juan Pablo Montero, 1998. "Optimal Opt-in "Climate" Contracts," Journal of Applied Economics, Universidad del CEMA, vol. 1, pages 363-384, November.
    12. Ghadir Asadi & Mohammad H. Mostafavi-Dehzooei, 2022. "The Role of Learning in Adaptation to Technology: The Case of Groundwater Extraction," Sustainability, MDPI, vol. 14(12), pages 1-37, June.
    13. Marcelo Caffera & Juan Dubra, 2005. "Getting Polluters to Tell the Truth," Microeconomics 0504008, University Library of Munich, Germany.
    14. Antoine Mandel, 2009. "Changes in the firms behavior after the opening of markets of allowances," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(1), pages 1-25, July.
    15. Dietrich Earnhart & Sarah Jacobson & Yusuke Kuwayama & Richard T. Woodward, 2023. "Discretionary Exemptions from Environmental Regulation: Flexibility for Good or for Ill," Land Economics, University of Wisconsin Press, vol. 99(2), pages 203-221.
    16. Newell, Richard G. & Pizer, William A., 2003. "Regulating stock externalities under uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 416-432, March.
    17. JunJie Wu & Bruce Babcock, 2001. "Spatial Heterogeneity and the Choice of Instruments to Control Nonpoint Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(2), pages 173-192, February.
    18. Spaeter, Sandrine & Verchère, Alban, 2004. "Aléa moral et politiques d’audit optimales dans le cadre de la pollution d’origine agricole de l’eau," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 71.
    19. Krysiak, Frank C. & Oberauner, Iris Maria, 2010. "Environmental policy à la carte: Letting firms choose their regulation," Journal of Environmental Economics and Management, Elsevier, vol. 60(3), pages 221-232, November.
    20. Antoine Mandel, 2007. "Welfare improvement properties of an allowance market in a production economy," Post-Print halshs-00155803, HAL.
    21. Benford, Frank A., 1998. "On the Dynamics of the Regulation of Pollution: Incentive Compatible Regulation of a Persistent Pollutant," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 1-25, July.

    More about this item

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • D0 - Microeconomics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-07q20001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.